Solaris Oilfield Infrastructure: No Debt And A 7% Dividend Yield

Summary

  • Solaris is rebounding from the downturn.
  • Shares have not seen any appreciation due to the pessimism about fracking.
  • We think the company is attractive at current levels and are recommending it for growth and income.
  • Looking for more investing ideas like this one? Get them exclusively at The Daily Drilling Report. Get started today »

Introduction

Solaris Oilfield Infrastructure, (NYSE:SOI) is a company we haven't covered previously, but one I thought we should cover as it completes the frac round up. First we have the pressure pumping provided by Liberty Oilfield Services, (LBRT), then we have the proppant provided by U.S. Silica Holdings, (SLCA), and lastly we come to a pure-play silo storage company, SOI. This company has ridden the downturn while remaining cash flow positive and paying a dividend yielding 7%. This is an unusual combination in the wreckage that constitutes the oilfield these days, or at least Frac-verse portion of it.

Source

Given all of that it was only natural to complete my beaten-down oilfield trilogy with them. You can see from the graphic above that sentiment toward this sector has been so bad they have never really recovered from the lows set in late March. That can't be justified in company generating free cash and having no debt on the balance sheet.

I think the company will experience continued growth in Q-4 if the current softness, that we note in the graphic below, remains a blip. As noted in the title, $40 is the magic number.

Primary Vision, Chart by author

The thesis for SOI

SOI is in the business of streamlining the sand management system on the rig. Their equipment can provide 2.5 million pounds of wellsite proppant storage in the footprint of two flatbed trailers. Solaris' six-silo system contains three times the on-site sand storage capacity in half the space of a conventional SandKing system. The vertical tank system is scalable and in the 12-silo configuration provides 5 million pounds of proppant storage and can deliver sand at an average rate of 23,000 pounds per minute.

SOI equipment is shown in the vertical silos in the pic above. On the left

This article was written by

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40 years of oilfield and analyst experience to work to find you winners.

I am an oilfield veteran of 38+ years. Retired from Schlumberger since 2015. My background is drilling and completion fluids. I have authored a number of technical papers on completion topics. I have worked around the world- Brazil, Russia, Scotland, and the Far East. I still maintain a training and consulting practice and am always willing to help people who want to learn.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is not advice to buy or sell this stock or ETF. I am not an accountant or CPA or CFA. This article is intended to provide information to interested parties and is in no way a recommendation to buy or sell the securities mentioned. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to do their own due diligence before investing their hard-earned cash.

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